Fund / Portfolio Construction & Returns

Begin with the fund, or bring a reviewed position

The first three workbenches follow the company capital lifecycle: its funding requirement, financing structure and ownership. This workbench begins the fund and investor branch. It asks how capital is allocated across companies and how portfolio outcomes reach the fund’s investors. It is not a required fourth step in financing a company.

• How much commitment remains after modeled fees, expenses, checks and reserves?
• When must capital be called, and which follow-ons use company reserves?
• How do cash realizations and remaining position values contribute to portfolio results?
• What do LPs receive after fund costs and the stated whole-fund carry convention?

Separate commitment, calls and cash

Commitment

The maximum modeled LP contribution. It is not money in the fund on day one.

Paid-in capital

The cumulative dated capital calls, including money used for management fees and expenses. Paid-in capital plus uncalled commitment equals commitment.

Contribution cash

Called money remaining after checks, paid fees, expenses and distributions from that cash bucket. This cash funds investments and fund costs.

Proceeds cash

Investment realization receipts still held by the fund. In V1, these proceeds are held or distributed; they do not fund new checks or expenses.

Investment budget

Commitment less lifetime modeled fees, expenses and cash distributed from unused contributions. A budget is capacity, not a current bank balance.

Enter calls directly or prepare a call proposal for review. Only accepted dated calls create cash. A reserve allocation alone does not trigger a call; a later call cannot repair an earlier cash shortfall. Changes to spending assumptions do not silently change accepted calls.

Make the cost convention visible

Management fees use committed capital throughout the modeled term. Enter one annual rate during the investment period and another after it. The rate can step down; the capital basis does not fall when companies exit or are written off. This is a bounded planning convention, not a reading of a partnership agreement.

Fees are paid quarterly in advance on dates anchored to fund start. A full quarter costs commitment × annual rate ÷ 4. Partial quarters are prorated by the days covered within that scheduled quarter; a rate change splits the coverage. No new fee is charged at the modeled end date. Inspect the coverage dates and rate in the fee schedule.

Organizational, legal, audit, administration and other fund expenses remain separate dated cash costs. Lifetime scheduled costs reduce investment capacity before payment; only dated payments reduce cash. Future unaccrued costs are not deducted as a current NAV liability. The workbench uses a cash-based analytical convention, without expense payables or fee-prepayment assets.

Trace the initial check, reserve and follow-on

1. Invest the initial check

   Name the company and enter its exact investment date and cash amount. Round, stage and security labels add context without requiring valuation or ownership.

2. Allocate a reserve

   Earmark capacity for that company. Allocation reduces unassigned capacity but moves no cash and creates no investment.

3. Deploy a follow-on

   Enter the later check and the amount drawn from that company’s reserve. The remainder uses discretionary capacity. Deployment moves cash and increases invested capital once.

4. Review what remains

   Allocated reserve equals deployed plus released plus outstanding reserve. Releasing a reserve restores unassigned capacity without bringing cash into the fund.

Keep ownership qualified and sources fixed

Ownership is an optional dated observation. Identify whether the percentage is issued, as-converted, fully diluted or a manual economic estimate. An old observation is not proof of current ownership after a follow-on or financing. Compare dilution only on a consistent denominator. Never add ownership percentages across unrelated companies.

A Cap Table position review identifies the source model, investor, selected securities, cutoff, investment dates and ownership basis. Review original cash consideration and missing history before accepting it. Conversion of a prior SAFE or note does not create a second cash investment. A conditional SAFE purchase-to-cap ratio is not complete issued or fully diluted ownership.

The accepted projection remains usable if its source changes or is deleted. Refresh is an explicit review, and must not overwrite manual checks, realizations or marks. The fund does not reproduce company securities, liquidation preferences or conversion elections. A percentage multiplied by company value cannot establish preferred-holder exit proceeds.

• Read the ownership and security conventions →

Distinguish a value assumption from a sale

Residual position value

An explicit value for the fund’s remaining position, with an effective date and assumption basis. An absent mark is unknown; it is neither zero nor automatically cost.

Proportionate partial realization

Sell a stated fraction of the entire remaining blended company position. The same fraction of remaining cost is disposed. Enter a new remaining-position mark, or explicitly confirm a proportionate carry-forward of the previous valid mark.

Full realization

Cash sale of the entire remaining position. Remaining cost and value become zero; the receipt enters proceeds cash, not LP distributions automatically.

Write-off

Economic closure at zero cash proceeds and residual value. Written-off cost remains in cumulative invested capital. This does not legally cancel shares.

Read portfolio gross and LP net on their own bases

Gross and net multiples have different denominators: investment checks versus LP paid-in. Fees and expenses affect LP returns through funded contributions and remaining cash; do not subtract them again as separate LP cash flows. Zero denominators and incomplete cost or valuation history produce unavailable metrics. Portfolio metrics aggregate amounts and dated flows, rather than averaging company MOICs or IRRs.

For compatibility with existing spreadsheet imports, the performance CSV retains “Realized disposal MOIC” in its Metric column and its original availability-status values. This is the same ratio described here as Realization MOIC (including write-offs).

Return contributed capital before releasing profit carry

V1 uses a whole-fund capital-back-first convention without a hurdle or catch-up. All paid-in capital, including fee and expense contributions, enters one return-of-capital tier. All distributions use that same cumulative waterfall, whether their cash comes from investment proceeds or unused contributions.

Before the capital program closes, distributions can return unreturned paid-in capital but cannot release profit or carry. Closing requires the investment period to have ended, no future calls or company checks, all company reserves deployed or released, and contribution cash sufficient for remaining scheduled costs. Closing does not require calling the full commitment.

After close, the distribution first returns any unreturned contributed capital. The remaining cash is split between LP profit and carry at the entered rate. The request must fit its cash bucket and protect future costs. NAV cannot fund a cash distribution or carry payment. This conservative release rule is stricter than many actual agreements.

Use dated IRR only when the cash flows support it

Dated IRR discounts each cash flow using actual elapsed days divided by 365. Portfolio gross IRR uses checks, sale proceeds and one terminal portfolio residual value. LP net IRR uses calls, LP distributions and one terminal LP net NAV. Those terminal values are analytical inputs, not stored cash receipts.

V1 reports a rate for a conventional net sequence: negative dated flows followed by positive dated flows, with a positive time span. Multiple sign transitions can create ambiguous roots, so no single IRR is selected. Same-day netting may change the sign pattern, but the original gross transactions remain inspectable.

Worked example: three companies, one fund

All amounts below are fixed USD millions. This illustrative case runs from 1 January 2025 to 1 January 2028, with commitment 10.000. The investment period ends and capital program closes on 1 January 2027. Fees use commitments at 2% annually for two years and 1% for the final year, quarterly in advance. There is a 0.100 organizational expense at inception and 20% carry. Residual investments remain at fund end.

Optional common-equity observations begin at Aster 10%, Birch 10% and Cedar 5%. Aster’s post-follow-on observation is 12%; a later 20% relative dilution makes it 9.6%, a 2.4 percentage-point decline. Birch’s proportionate half-sale reduces its holding to 5%. These observations do not determine proceeds or marks; Cedar’s last ownership remains historical context after write-off.

Eight fees of 0.050 and four of 0.025 total 0.500. With expenses of 0.100, calls total 6.600 = 6.000 checks + 0.500 fees + 0.100 expenses. Paid-in 6.600 + uncalled 3.400 = commitment 10.000. Allocated reserves 1.500 = deployed 1.000 + released 0.500 + outstanding 0. The remaining 3.400 budget is not deployable after program close.

The January 2027 distribution returns 6.600 of capital and splits 5.400 profit: LPs receive 10.920 and carry is 1.080. The July distribution pays LPs 1.200 and carry 0.300. Total LP distributions are 12.120 and paid carry is 1.380. Final cash reconciles: 6.600 + 13.500 − 6.000 − 0.500 − 0.100 − 12.120 − 1.380 = 0.

Total hypothetical carry is 20% × (12.120 LP distributions + 1.380 paid carry + 2.000 residual value − 6.600 paid-in) = 1.780. Subtract already paid carry 1.380 to obtain hypothetical unpaid carry 0.400. LP net NAV is 2.000 − 0.400 = 1.600; that 0.400 is not a cash payment.

Build and review your first fund case

1. Set the fund terms

   Choose one denomination, commitment, exact calendar, fee rates, expenses and carry rate. Review the fixed commitment fee basis.

2. Build the portfolio and reserves

   Enter companies and dated checks, then allocate reserves and plan follow-ons. Ownership and source imports are optional.

3. Review calls and funding

   Enter calls or review a prepared proposal. Inspect both economic capacity and the first dated contribution-cash shortfall.

4. Add values and realizations

   Use dated remaining-position marks, explicit sales and write-offs. Correct missing cost history or valuation coverage before reading complete performance.

5. Review distributions and evaluate

   Choose the reporting date. Inspect close eligibility, protected costs and each LP/carry split. Read gross and net results with their cash-flow ledgers and reconciliation.

Dates determine replay; reporting months or quarters only summarize it. Entered assumptions are not verified transactions. Projected events and unconfirmed generated fees keep affected results labeled projected or unconfirmed. Changing inputs makes an earlier evaluated report stale. An entered distribution allocation requires renewed review if upstream changes alter its LP/carry split.

Save the case and carry its assumptions

Use your Analytics account and My Models to create, reopen, rename and delete saved fund cases. Valid documents autosave; a structurally valid underfunded plan can remain saveable while its infeasibility is visible. Check save status, and retain a JSON backup if the session or connection fails.

Each saved fund contains one named portfolio case. Duplicate as a new case to explore later exits, different follow-ons or lower marks. Cases have independent events and revisions. JSON import is reviewed and creates a separate model; frozen source economics remain, while live source refresh references are detached.

Current result CSVs provide fund cash, portfolio cash flows, LP cash flows, company positions, performance and reconciliation. Their headers identify reporting date, denomination, basis and cash-flow perspective. Unavailable values remain blank with a reason. Complete performance exports require fresh, feasible and complete results; input JSON and labeled diagnostics serve different purposes.

• Open My Models →

Use the stated V1 boundaries

This workbench models one fund, one denomination and aggregate LP economics. It is not a fund administrator, portfolio accounting record, LP portal, investment recommendation system or interpretation of legal, tax or accounting obligations. Review Model basis alongside every result.

• No individual LP allocation or multiple LP classes, GP commitment account, side letters or multiple closes.
• No credit facilities, recycling, recallable distributions, FX or secondary transactions.
• No hurdle, catch-up, deal-by-deal carry, tiered waterfall or clawback administration.
• No class-specific partial sales, debt coupon schedules, in-kind distributions or automatic valuation from ownership.
• No probability forecasts, Monte Carlo, portfolio optimization or automatic best-investment rankings.